Several housing reports released this week have revealed a
surge in home construction everywhere, as well as homebuyer
confidence, thus triggering a wave of increases for homebuilding
Earlier today, the U.S. Census Bureau jointly announced with the
Department of Housing and Urban Development the new residential
construction statistics for September 2012. Privately-owned
housing units reported to authorizing more than 894,000
homebuilding permits, a 45.1 percent increase from last year's
At the same time, single family housing experienced a 6.7 percent
rise in authorized building permits within a one-month timeframe,
at a rate of 545,000 compared to August's 511,000.
As for housing starts and housing completions, the Census Bureau
and HUD reflected a similar trend of increases. Privately-owned
housing starts jumped 34.8 percent compared to last year, whereas
in one month, single-family housing completions rose 8.5 percent.
On Monday, the National Association of REALTORS released a report
that indicated nationally lower housing inventories (a total of
17 percent lower than last year's inventory) suggesting
progressive homebuyer activity, in addition to a higher median
list price; September's median list price for homes are about .78
percent higher than a year ago.
The National Association of Home Builders/Wells Fargo Housing
Market Index (HMI) also released a report on Tuesday, stating
that October made its sixth consecutive month of higher buyer
confidence rates for newly built single-family homes.
"Many builders are reporting increases in the number of serious
buyers visiting sales offices, and the overall confidence measure
is much higher than it was at this time of year," NAHB chairman,
Barry Rutenberg said.
As the news about the housing market quickly circulated, several
publicly traded homebuilding stocks experienced a slight surge in
value, including PulteGroup Inc. (
), Lennar Corporation (
), M.D.C. Holdings Inc. (
), Toll Brothers Inc. (
), K. Hovnanian Homes (
) and D.R. Horton (
Although some companies only inched about 3 to 5 percent higher
in price - like Lennar, D.R. Horton and Beazer Homes (
), to name a few -- others reveled in as high as 6 to 10 percent
increases. Pulte Group met a 6.4 percent increase, while both K.
Hovnanian Homes and KB Home met closely with an increase at about
Even non-homebuilding, yet closely related companies, were
influenced by the upbeat housing data - home improvement
retailers Home Depot (
) and Lowe's Companies (
) both underwent at least a 2 percent increase in stocks. Paint
manufacturer and distributor, Sherwin Williams (SHW) also took
part in the stock value jump, only $2 away from reaching its
"Today's strong report...confirms our view that a housing
recovery is solidly underway in a growing number of markets
nationwide," said David Crowe, NAHB's chief economist. "That
said, we are now almost at the half-way mark in terms of what
would be considered a normal amount of new-home construction in a
healthy economy, and we need to see consistent improvement like
this over an extended period to get back to where the market
should be in terms of generating jobs and economic growth."
Despite recent growths in the housing market, economists and
analysts are not completely buying into a promising future just
yet. Rutenberg shares this sentiment.
"While September's surge in activity is certainly encouraging, we
need to remember that we still have a long way to go back to
fully functioning market," Rutenberg said. "In order to get
there, significant challenges must still be addressed in terms of
credit availability and appraisal issues, as well as the
increasing cost of building homes due to rising materials' prices
and a declining inventory of buildable lots."About GuruFocus:
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